CityCenter’s heavy burden

Massive MGM Mirage complex aims to revitalize Las Vegas

Talk about rolling the dice. In December, MGM Mirage opened CityCenter in Las Vegas, a massive 18 million-square-foot complex built on the Strip with an eye-popping pricetag of $8.5 billion.

Billed as the largest privately funded real estate development in U.S. history, this shimmering glass-and-steel city-within-a-city aims for nothing less than rebooting a troubled Las Vegas and giving visitors a dramatic new reason to come to the gambling capital.

Geared to a high-end audience of Vegas regulars and holdouts, CityCenter seeks to expand the city’s visual vocabulary and redefine its status globally by offering a sleekly urban collection of world-class architecture and art, standard-setting luxury hotels and condos, a 61-story casino resort and more than 500,000 square feet of upscale retail and entertainment.

Built on 67 acres between the Bellagio and Monte Carlo resorts, CityCenter includes sustainably developed high-rise towers from renowned architects Cesar Pelli (Aria Resort and Casino), Rafael Vinoly (Vdara Hotel and Spa), Helmut Jahn (Veer Towers) and Norman Foster (the Harmon Hotel). Visitors also can experience a nongaming Mandarin Oriental with floor-to-ceiling glass windows in its 23rd floor bar; Crystals, a stylish shopping and entertainment space designed by architects Daniel Libeskind and David Rockwell populated with top-end retailers, including the largest Louis Vuitton and Prada stores in the U.S.; and a $40 million public art collection with contemporary works from Maya Lin, Jenny Holzer, Claes Oldenburg, Nancy Rubins, Henry Moore and others.

While it’s too early to assess CityCenter’s success, MGM Mirage points to 68% occupancy in December at the 4,000-room Aria, increased bookings week by week since then, and even selection several weeks ago of Sage (from Chicago chef Shawn McClain) as a national semifinalist for new restaurant by the James Beard Foundation Awards.

The key for CityCenter, says MGM Mirage chairman and CEO Jim Murren, was to produce a game-changing collection of properties.

“We believed that it was vital to make a statement that this was not more of the same,” says Murren, who began exploring the idea of a cutting-edge urban development in Las Vegas less than six years ago. That was 2004, a decidedly more extravagant time for imagining, and financing, large-scale real estate development.

MGM Mirage brought in Dubai World as a majority financing partner in August 2007, and nearly faced bankruptcy last March when the United Arab Emirates firm filed suit in an attempt to exit the joint venture. The partners worked out an agreement five weeks later, ensuring that the massive construction project would be completed. Dubai World’s recent debt troubles did not affect the opening of CityCenter, which is fully funded.

“We were very pleased to be on schedule,” says Bobby Baldwin, president and CEO of CityCenter. He oversaw the complicated logistics of construction involving hundreds of designers, more than 1,000 subcontractors, and some 10,000 construction and trades people.

Baldwin, a former World Series of Poker champion, knows that CityCenter is a big bet in a city especially hard hit by the recession.

Late last year, CityCenter made the decision to cut prices for its residences by 30% and put in place an inhouse financing program to close deals on residences.

The ambitious development includes 2,400 residences in addition to more than 6,000 hotel rooms and suites.

Yet Baldwin, like Murren, believes that CityCenter’s opening provides an economic and cultural turning point for Las Vegas.

“I see CityCenter as a booster or overdrive for everything,” Baldwin said. “Times would be a lot tougher without CityCenter in 2010 and 2011.”

In fact, the Las Vegas Convention and Visitors Authority expects a 2%-5% increase in visitors this year directly attributed to CityCenter. The city attracted an estimated 36 million visitors in 2009, representing a nearly 5% downturn from the previous year.

Rajesh Jhingon, general manager at the new 47-story Mandarin Oriental, says CityCenter and his property will attract an elite clientele who previously ignored Las Vegas.

“We are the first non-gaming hotel on the Strip at the high end,” he said, simultaneously benefitting from calm detachment and still only a short walk from Aria’s casino and the full thrust of CityCenter’s shopping and entertainment. “We are blessed in many ways.”

As much as CityCenter may target an urbane crowd, MGM Mirage was not taking any chances when it chose its signature entertainment. “Viva Elvis,” a joint partnership of MGM Mirage, Cirque du Soleil and Elvis Presley Enterprises, is clearly intended to lure a massive audience. The new Cirque production, showcased in a $225 million theater in Aria and highlighting Presley’s life and music, gives MGM Mirage quite a one-two punch. Its Mirage resort already features that other musical sensation: The Beatles with “Love.”

Are CityCenter’s stylish offerings sensational enough to generate the enthusiasm, and lure the high-flying visitors, needed to turn things around in the Nevada desert? MGM’s leadership and investors will be tracking that question closely

“In the end, there’s only one judge,” Baldwin says, “and that’s the public.”